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Brilliance Jinbei teamed up with Chery for shallow cooperation or capital integration?
The collaboration between Brilliance Jinbei and Chery Automobile has sparked widespread interest in the Chinese automotive industry. Both companies are considered mid-level brands with their own intellectual property, but they share a common history of relying on Mitsubishi engines. However, recent developments suggest that their partnership may go beyond just shared components.
In May, both companies established a joint venture called Shanghai Kewei Auto Parts Co., Ltd., with each contributing 5 million yuan to a total registered capital of 10 million yuan. The stated purpose of the joint venture is to streamline procurement processes and reduce costs by leveraging a shared platform for parts and components. However, analysts remain skeptical about the practicality of this model.
Both Brilliance Jinbei and Chery have independent purchasing departments, and their product lines differ significantly. While Chery focuses exclusively on passenger cars, Brilliance Jinbei also produces commercial vehicles and buses. This divergence makes it difficult for them to achieve meaningful cost savings through joint procurement. Furthermore, the design and development of parts vary across their platforms, limiting the scope of shared components.
Despite these challenges, both companies remain cautious about the future of their cooperation. Chery’s Sales General Manager, Jin Yibo, said that early-stage collaboration has been successful, but further discussions are ongoing. A representative from Brilliance Jinbei added that while the joint venture is just one step, there are no concrete plans for deeper integration at this point.
However, industry observers speculate that the partnership might be more strategic than it appears. Some believe that Chery could be seeking to learn from Brilliance Jinbei’s experience in capital operations ahead of its potential IPO. Others suggest that the two companies might be laying the groundwork for a more substantial merger, similar to the Renault-Nissan alliance.
Both Brilliance Jinbei and Chery are state-owned enterprises with strong local government backing. They are also key players in China’s national auto industry, which has seen increased support for mergers and acquisitions. Additionally, both companies have historical ties to FAW, further strengthening their connection.
As the automotive landscape continues to evolve, the long-term success of this partnership remains uncertain. But one thing is clear: the collaboration between these two national brands signals a shift toward greater integration and strategic alignment in China's auto sector.